With news of the Build Back Better Act permeating nightly broadcasts, some of our readers have likely already called their estate planning attorney to figure out if they need to update their plan. Indeed, every time a new tax law is passed, one should update their estate plan to incorporate the new tax changes. However, taxes are not the only reason to update an estate plan.
Estate planning basics
The primary estate planning document is the will (known as the last will and testament). Though, a common alternative is a pour-over will, in conjunction with a revocable or living trust. These documents designate heirs and who gets what. These should be updated periodically as heirs have children or pass.
An estate plan should include designating guardians for minor and disabled children. Normally, a surviving spouse will be the guardian, but sometimes, that may not be practical or both spouses may die together. The estate plan should outline those various contingencies and be updated periodically as life changes.
The person that administers one’s estate is known as the executor. The executor is the person or financial institution that manages the affairs of the estate and ensure that the estate plan is followed. That person can be anyone, but one’s choice can also change. This person or entity should be updated periodically if one’s preferences change, they pass or if they want the executor to be a financial institution or professional.
Our estate plans will include where all assets will go upon our death. But, our assets change over time, which is why, whenever we have significant asset additions or sales, we should update our estate plan accordingly. The value of those assets can also change dramatically over time, and when this happens, an update may also be needed.
For our Plano, Texas, and throughout Collin County, readers, the key takeaway here is that as life changes, so too should our estate plans. They are living documents.